“The activities of smugglers had made it difficult for Nigeria to determine the actual consumption figures for petrol, pointing out that the corporation can only give account of what was trucked out from loading depots across the country but cannot determine how much of that was consumed in-country’’
The Nigerian National Petroleum Corporation (NNPC) says efforts to combat the menace of smuggling of petroleum products across the nation’s borders have been largely hampered by existing arbitrage fueled by the current huge price differentials in pump price of petrol in Nigeria.
With a price differential of over N100 per litre between what is sold in Nigeria and in neigbouring countries, NNPC said it was difficult to curtail the activities of petrol smugglers.
The Group Managing Director of NNPC, Mallam Mele Kyari, said this in a presentation at an interactive session by the Joint Senate Committee on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The Senate Joint Committee session was chaired by Senator Solomon Adeola (Lagos West) with members drawn from the Senate Committees on Finance, National Planning, Foreign and Local Debts, Banking, Insurance, and other Financial Institutions, Petroleum Resources Upstream, Downstream Petroleum Sector and Gas.
The NNPC GMD said though the corporation, working in concert with other federal agencies, had made noticeable progress in combating the menace, but that “the battle is yet to be won’’.
“As long as there is arbitrage between the price that you sell and what is obtainable elsewhere, you can be sure that it is very difficult to contain the situation,” Kyari said in a statement by Mr Garba Deen Muhammad, the Group General Manager, Group Public Affairs Division of NNPC, a copy of which was given to Persecondnews.
He said the activities of smugglers had made it difficult for Nigeria to determine the actual consumption figures for petrol, pointing out that the corporation can only give account of what was trucked out from loading depots across the country but cannot determine how much of that was consumed in-country.
On the MTEF assumptions, Kyari reiterated a base oil price scenario of $57 per barrel for 2022, $61 per barrel for 2023 and $62 per barrel for 2024 predicated on a base national production of 1.883 million barrels per day in 2022, 2.234 million barrels per day in 2023 and 2.218 million barrels per day in 2024.
“The assumptions were arrived at after consultations with the Ministry of Finance and other relevant stakeholders while also undertaking a careful appraisal of the three-year historical dated Brent Oil Price average of $59.07 per barrel premised on Platts Spot Prices among other considerations’’.
He explained that price growth was to be moderated by the lingering concerns over COVID-19, increased energy efficiency as well as obvious switching due to increased utilization of gas and alternatives for electricity generation.